If your household budget remains high but your husband says the family business is suddenly poor, he may intentionally lower the company value. This tactic is a common strategy in high asset California divorces. It helps a spouse reduce the amount of community property for division.
While this is stressful, California disclosure laws help you find the truth. Specifically, forensic accounting can uncover the real story behind the business ledgers.
Low accounts receivable
You may notice that the business is busier than ever. However, the invoices stay unpaid. A spouse might delay billings until after the divorce is final. As a result, the business looks less profitable on paper. This maneuver hides the actual earning capacity of the company during the valuation process.
New and large expenses
The company might invest in massive equipment upgrades right now. They may also hire unneeded consultants or pay large bonuses. These costs zero out the net income to lower the business valuation. A forensic accountant can determine if these purchases were truly necessary for operations.
Small personal draws
Your husband has historically taken a specific monthly salary to fund your life. Now, he says he can only afford half that amount. He likely diverts that cash elsewhere to hide it from support math. Uncovering these moves requires a deep dive into tax returns and a lifestyle analysis.
This analysis shows the court that the business income does not match your day to day life. It serves as a vital tool when a spouse claims insolvency despite living in a luxury home.
Protect your fair share of marital property
In California, business owners owe a fiduciary duty to their spouses. The rule is to act in the highest good faith and do not take unfair advantage of the other party. Because of this, business manipulation is not just a tactical move. The court sees it as a breach of duty.
Under the Family Code, this can lead to sanctions or a higher award for you. If a court finds evidence of fraud, malice or oppression, it has the discretion to award up to 100% of the hidden asset to the other spouse.
Secure your financial future
An attorney can request a lifestyle analysis to compare current performance vs. historical averages. Having an advocate protects you from leaving money on the table. They understand how to present complex financial data to a judge to ensure a fair outcome.
